Bryant Semenza v. United States Postal Service ( 2024 )

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
BRYANT SEMENZA, DOCKET NUMBER
Appellant, PH-0845-18-0448-C-1
v.
OFFICE OF PERSONNEL DATE: June 27, 2024
MANAGEMENT,
Agency.
THIS ORDER IS NONPRECEDENTIAL 1
Andrew J. Race , Esquire, Lebanon, Pennsylvania, for the appellant.
Carla Robinson , Washington, D.C., for the agency.
BEFORE
Cathy A Harris, Chairman
Raymond A. Limon, Vice Chairman
Henry J. Kerner, Member
ORDER
The appellant has filed a petition for review of the compliance initial
decision, which denied his petition for enforcement of the settlement agreement
resolving his underlying overpayment appeal. For the reasons discussed below,
we GRANT the petition for review, REVERSE the compliance initial decision as
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
to the determination that the Office of Personnel Management (OPM) did not
breach the provision concerning reinstatement of the appellant’s annuity
supplement, and ORDER OPM to file evidence of compliance within 45 days.
BACKGROUND
The appellant retired under the Federal Employees’ Retirement System
(FERS) in August 2014, at 56 years of age. Semenza v. Office of Personnel
Management, MSPB Docket No. PH-0845-18-0448-I-1, Initial Appeal File (IAF),
Tab 5 at 6, 34, 46. That same month, he became eligible for a FERS annuity
supplement. Id. at 6. OPM subsequently determined that he had exceeded the
FERS supplement minimum level of earnings for calendar year 2015. Id. at 6, 18.
In August 2018, OPM issued a final decision, concluding that because
he exceeded the minimum level of earnings, his supplement benefit payments
should have been terminated in July 2016. Id. at 6-7. Thus, the appellant had
been overpaid $11,808 in FERS annuity supplement benefits between July 2016
and March 2017, when his payments were not reduced for his excess earnings.
Id. The appellant filed a Board appeal from OPM’s final decision. IAF, Tab 1
at 4-6. He also asserted that OPM should have reinstated his annuity supplement
after he stopped working in October 2016. Id. at 5.
On April 17, 2019, the parties entered into a settlement agreement
resolving the appellant’s overpayment appeal. IAF, Tab 12 at 3. Under the terms
of the agreement, the parties agreed to a collection schedule spanning 42 months.
Id. The appellant also agreed to withdraw his Board appeal. Id. Paragraph 3 of
the agreement further provided that, “If [the appellant] is due any accrued annuity
due to reinstatement of his annuity supplement, the accrued annuity will be
applied to the overpayment.” Id. The administrative judge found that the
agreement was lawful on its face and freely reached, and the parties understood
the terms of the agreement and agreed to have it enforced by the Board.
IAF, Tab 13, Initial Decision (ID) at 2. Accordingly, she accepted the agreement
3
into the record for enforcement purposes and issued an initial decision dismissing
the appeal as settled. Id. The initial decision became the final decision of the
Board on May 30, 2019, when neither party filed a petition for review. Id.The appellant subsequently filed a petition for enforcement seeking to
enforce paragraph 3 of the agreement. Semenza v. Office of Personnel
Management, MSPB Docket No. PH-0845-18-0448-C-1, Compliance File (CF),
Tab 1 at 3-4. Specifically, he alleged that the agency had not reinstated his
annuity supplement and applied it to the overpayment as required under the
settlement agreement. Id. at 3. He requested that the administrative judge find
that the agency violated the settlement agreement and award him costs, interests,
and attorney fees. Id.OPM responded by arguing that its obligations in paragraph 3 were
conditioned on OPM’s determination that the appellant was eligible for
reinstatement of his annuity supplement. CF, Tab 3 at 4. Because it had not
made a determination regarding reinstatement, OPM asserted it had complied
with the agreement by collecting the overpayment consistent with the collection
schedule set forth therein. Id. The appellant did not respond. The administrative
judge issued a compliance initial decision that denied the appellant’s petition for
enforcement, concluding that the agency had complied with the terms of the
settlement agreement. CF, Tab 6, Compliance Initial Decision (CID) at 1-2.
The appellant has filed a petition for review of the compliance initial
decision. Compliance Petition for Review (CPFR) File, Tab 1. The agency has
submitted an untimely response in opposition to the compliance petition for
review, and the appellant has replied. 2 CPFR File, Tabs 4, 7.
2
Any response to a petition for review must be filed within 25 days of service of the
petition for review. 5 C.F.R. § 1201.114(e). On November 23, 2020, the appellant filed
his petition for review using the Board’s e-Appeal system, and the agency, which is
registered as an e-filer, is deemed to have received it the same day. PFR File, Tab 1
at 7; see 5 C.F.R. § 1201.14(m)(2) (stating that registered e-filers are deemed to have
received documents on the date of electronic submission). Thus, any response was due
by December 18, 2020, and the agency’s December 21, 2020 response was 3 days late.
CPFR File, Tab 4. The Clerk offered the agency an opportunity to show good cause for
4
DISCUSSION OF ARGUMENTS ON REVIEW
The appellant reasserts on review that the agency breached the agreement
because the agency failed to determine if the appellant is eligible for an annuity
supplement and, if eligible, to apply any unpaid annuity to the overpayment as
required by the settlement agreement. CPFR File, Tab 1 at 4-5.
The administrative judge concluded that the agency complied with this provision
of the agreement without an explanation or analysis. CID at 2. We disagree with
his determination.
As the “‘personnel and payroll office’ for . . . retirees and survivors,” OPM
has primary responsibility for administering FERS. Office of Personnel
Management, Civil Service Retirement System and Federal Employees
Retirement System Handbook for Personnel and Payroll Offices (Handbook),
chapter 1 § 1C2.1(A), (E), http://www.opm.gov/retirement-services/publications-
forms/csrsfers-handbook/ (last visited June 27, 2024). OPM has broad authority
to pay annuity benefits, adjudicate all claims, and issue regulations as necessary
to do so. 5 U.S.C. § 8461(a)-(c), (g). The annuity supplement, such as the one at
issue, is a benefit administered by OPM to qualifying FERS employees who retire
before the age of 62. 5 U.S.C. §§ 8421(a), 8461(a); 5 C.F.R. § 842.503(a)-(b);
Handbook, chapter 51 § 51A1.1-1(A). It provides income equal to the Social
Security old-age benefit a retiree will receive once eligible. 5 U.S.C. § 8421(B)
(2). A retiree remains eligible for the annuity supplement until eligible for the
the delayed filing. CPFR File, Tab 5. The agency responded, stating that it was
operating with limited resources due to the coronavirus pandemic, and the agency
representative was on annual leave from December 14-18, 2020. CPFR File, Tab 6.
However, the agency had 21 days between the date of service of the petition for review
and the start of the agency representative’s annual leave to file its response or request
an extension of time to file. Further, although the agency indicated that transfer of its
retirement file was delayed, apparently due to the pandemic, it did not indicate the
length of the delay. Id. at 6. Thus, we find that the agency has not shown good cause
for its untimeliness. See Wojcicki v. Department of the Air Force, 72 M.S.P.R. 628, 632
n.1 (1996) (declining to excuse an agency’s 1-day delay in filing its response to a
petition for review, allegedly due in part to the press of other work). Nonetheless, we
have considered the agency’s response and find that it does not affect our decision.
5
old-age Social Security benefit or age 62, whichever occurs first. 5 C.F.R. §
842.503(c).
OPM will reduce or eliminate the supplement if a retiree earns above a
certain minimal level in the prior year. 5 C.F.R. § 842.505(a); Handbook,
chapter 51 § 51A3.1-1(C). For this reason, OPM requires retirees receiving the
annuity supplement to report earnings annually. 5 C.F.R. § 842.505(c);
Handbook, chapter 51 § 51A4.1-1(B). Under its regulations, OPM has authority
to determine if an annuitant is eligible to have his annuity supplement reinstated.
See 5 C.F.R. § 842.505(d) (providing that OPM can suspend the payment of the
supplement until the annuitant establishes to its satisfaction that he continues to
be eligible for the supplement). While OPM can reinstate the appellant’s annuity
supplement, the appellant is without authority to do so. See id.Here, the appellant asserts that the agency breached the agreement by
failing to determine his eligibility for reinstatement. CPFR File, Tab 1 at 4.
We agree. The Board has authority to enforce a settlement agreement that, like
the one at issue here, has been entered into the record in the same manner as any
final Board decision or order. Stasiuk v. Department of the Army, 118 M.S.P.R.
1, ¶ 5 (2012). A settlement agreement is a contract, and the Board will therefore
adjudicate a petition to enforce a settlement agreement in accordance with
contract law. Id.Paragraph 3 of the settlement agreement states, “If Mr. Semenza is due any
accrued annuity due to his reinstatement of his annuity supplement, this accrued
annuity will be applied to the overpayment.” CF, Tab 1 at 4. The agency
concedes that it has not determined the appellant’s eligibility for reinstatement of
his annuity supplement. CF, Tab 3 at 4. The agency submitted no evidence to
explain or resolve the appellant’s eligibility and has not alleged that the appellant
failed to provide it with information it needs to make such a determination, such
as information regarding his annual earnings. Id. It also did not indicate
6
whether, or when, it might make such a determination. Id. Essentially, the
agency argued that there had been no breach because it had taken no action.
It is well-settled that implicit in any settlement agreement, as under other
contracts, is a requirement that the parties fulfill their respective contractual
obligations in good faith. Hernandez v. Department of Defense, 115 M.S.P.R.
445, ¶ 11 (2010), aff’d per curiam, 451 F. App’x 956 (Fed. Cir. 2012).
OPM acknowledged that paragraph 3 of the settlement agreement is a condition
contingent upon the appellant’s eligibility for reinstatement of his annuity
supplement. CF, Tab 3 at 4. As the agency with the exclusive authority to make
a determination regarding reinstatement, it has an obligation to act under the
agreement. See 5 C.F.R. § 842.505(d).
In Williams v. U.S. Postal Service, 95 M.S.P.R. 145, ¶¶ 2-3 (2003),
an appellant and his employing agency entered into an agreement to hold his
demotion in abeyance pending OPM’s processing of his disability retirement
application. According to the appellant, the agency subsequently failed to
forward medical documentation regarding his disability retirement application to
OPM, and his application was denied because he was unable to prove his inability
to continue in his position. Id., ¶¶ 4, 8. The Board remanded the appellant’s
petition for enforcement for a determination of whether the employing agency
breached the implicit covenant of good faith when it failed to forward the
appellant’s medical documentation. Id., ¶¶ 8-9.
Similarly, we find that OPM’s failure to make a determination of the
appellant’s eligibility for reinstatement is a breach of the settlement agreement in
bad faith. Paragraph 3 of the agreement provides that if the appellant is eligible
to have his annuity supplement reinstated, the agency must calculate the amount
owed and apply it to the overpayment. However, only the agency can make this
determination. Therefore, the agency cannot avoid its contractual duty to apply
the appellant’s accrued annuity to his overpayment by failing or refusing to make
an eligibility determination as to the reinstatement of his annuity supplement.
7
Previously, OPM advised the appellant to submit an income survey to
determine his eligibility for reinstatement of his supplemental annuity.
IAF, Tab 5 at 11-12. He alleged below that he never received the survey. IAF,
Tab 8 at 15. On review, he claims he has been unable to reach anyone at OPM.
CPFR File, Tab 1 at 4-5. Because OPM has not provided evidence regarding its
attempts to determine the appellant’s eligibility for reinstatement of the annuity
supplement, we find the agency not to be in compliance with the terms of the
settlement agreement and reverse the compliance initial decision. 3
Because we have found OPM in noncompliance, it is being directed to file
evidence of compliance with the Clerk of the Board, and the appellant will be
afforded the opportunity to respond to that evidence. The appellant’s petition for
enforcement will be referred to MSPB’s Office of General Counsel, and,
depending on the nature of the submissions, an attorney with the Office of
General Counsel may contact the parties to further discuss the compliance
process. The parties are required to cooperate with that individual in good faith.
Because the purpose of the proceeding is to obtain compliance, when appropriate,
an Office of General Counsel attorney or paralegal may engage in ex parte
communications to, among other things, better understand the evidence of
compliance and/or any objections to that evidence. Thereafter, the Board will
issue a final decision fully addressing the appellant’s petition for review of the
3
An appellant is not required to show that the agency’s breach caused him actual harm
or monetary loss. Burke v. Department of Veterans Affairs, 121 M.S.P.R. 299, ¶ 11
(2014); Mullins v. Department of the Air Force, 79 M.S.P.R. 206, ¶ 11 (1998). Further,
the possibility exists that the appellant may be entitled to meaningful relief in the form
of retroactive reinstatement of his annuity supplement. See Burke, 121 M.S.P.R. 299,
¶ 13 (finding a petition for enforcement moot regarding a matter on which the Board
could no longer provide meaningful relief). Therefore, although the appellant is now
over 62 years of age and, according to the record, he would have finished repaying the
$11,808.00 annuity overpayment around October 2022, IAF, Tab 5 at 34; CF, Tab 1
at 4; CPFR File, Tab 7 at 4, we find it appropriate to order compliance in this matter.
8
compliance initial decision and setting forth the appellant’s further appeal rights
and the right to attorney fees, if applicable.
ORDER
We ORDER the OPM to submit to the Clerk of the Board within 45 days of
the date of this decision satisfactory evidence of compliance with this decision.
This evidence shall adhere to the requirements set forth in 5 C.F.R. § 1201.183(a)
(6)(i), including submission of evidence and a narrative statement of compliance.
OPM’s submission must include proof that it properly determined if the appellant
was eligible to have his annuity supplement reinstated, and if eligible, to
recalculate the amount of accrued annuity owed to the appellant. OPM must also
apply any accrued annuity owed to the overpayment. We ORDER the appellant
to cooperate in good faith in OPM’s efforts to calculate the amount of accrued
annuity due, and to provide all necessary information the agency requests to help
it carry out the Board’s Order. OPM must serve all parties with copies of its
submission.
The Board will assign a new docket number to this matter, PH-0845-18-
0448-X-1. All subsequent filings should refer to the new docket number set forth
above and should be faxed to (202) 653-7130 or mailed to the following address:
Clerk of the Board
U.S. Merit Systems Protection Board
1615 M Street, N.W.
Washington, D.C. 20419
Submissions may also be made by electronic filing at the MSPB’s e-Appeal site
(https://e-appeal.mspb.gov) in accordance with the Board’s regulation at 5 C.F.R.
§ 1201.14.
The appellant may respond to OPM’s evidence of compliance within
20 days of the date of service of the agency’s submission. 5 C.F.R. § 1201.183(a)
(8). If the appellant does not respond to OPM’s evidence of compliance, the
9
Board may assume that he is satisfied with OPM’s actions and dismiss the
petition for enforcement.
OPM is reminded that, if it fails to provide adequate evidence of
compliance, the responsible agency official and OPM’s representative may be
required to appear before the General Counsel of the Merit Systems Protection
Board to show cause why the Board should not impose sanctions for the agency’s
noncompliance in this case. 5 C.F.R. § 1201.183(c). The Board’s authority to
impose sanctions includes the authority to order that the responsible agency
official “shall not be entitled to receive payment for service as an employee
during any period that the order has not been complied with.” 5 U.S.C. § 1204(e)
(2)(A).
This Order does not constitute a final order and is therefore not subject to
judicial review under 5 U.S.C. 7703(a)(1). Upon final resolution of the remaining
issues in this petition for enforcement by the Board, a final order shall be issued
which shall be subject to judicial review.
FOR THE BOARD: ______________________________
Gina K. Grippando
Clerk of the Board
Washington, D.C.